Roblox shares dropped on Friday after Wall Street responded strongly to the company’s quarterly outlook, which showed falling bookings and slower revenue growth ahead.
The stock fell 20% in premarket trading on Friday, after dropping 2.9% on Thursday. So far this year, Roblox shares are down 40% and have lost almost 11% this month.
On Friday, both BTIG and Benchmark Equity Research became more negative on the stock and lowered their outlooks. Benchmark said Roblox might be entering a period of decline, with problems moving from new-user growth earlier in the year to monetization now. These issues are now affecting the under-13 audience, which is key to the platform’s social activity, growth, and spending from parents.
This change in outlook came after Roblox’s second-quarter report on Thursday evening. The company reported a loss of 26 cents per share, which was better than last year’s loss of 41 cents but worse than Wall Street’s expected loss of 34 cents.
Total bookings increased by 8% to $1.57 billion. This was below the analyst consensus of $1.6 billion and at the low end of the company’s own guidance range of $1.55 billion to $1.61 billion.
For the third quarter, Roblox expects bookings between $1.58 billion and $1.65 billion, which would be a drop of 14% to 18% and much lower than Wall Street’s estimate of about $1.9 billion. The company also expects third-quarter revenue between $1.41 billion and $1.49 billion, well below analysts’ projection of $1.86 billion.
Roblox chose not to provide full-year guidance, explaining that because it focuses on the long term, it does not see annual guidance as helpful for investors.
